..And now, let’s check in with the Bernard Madoff case, as we periodically do in this daily blog. You remember 70-year-old Bernie…admitted white collar criminal mastermind of the Boston-created Ponzi scheme that ended up bilking about fifty billion dollars from philanthropies, hospitals, rich people, poor people, charities, etc., across the country and, indeed, the globe.
When last we left Bernie, he and his lawyer were trying to prevent the government from convincing the court to have him await trial in jail instead of being in a probationary state in his luxury apartment. Guess what? He won that round.
You may recall I had predicted that, with a catastrophe this large, the finger of accusation would not be satisfied with just one man. Well, those who were supposed to have been regulating people like Bernie have been lounging around in the hot seat. But, now, it is someone else’s turn.
Robert Jaffe was a 64-year-old business associate of Bernie’s. He helped raise millions of dollars for Bernard L Madoff Investment Securities (BMIS) from Boston and Palm Beach’s wealthy social sets. He was vice-president of Cohmad Securities, a brokerage that was 20 per cent owned by Madoff. Cohmad paid commissions to financial advisers who steered cash to Madoff’s fund. He is also the son-in-law of Carl Shapiro, 95, a Boston philanthropist who is said to have lost $545 million invested with Madoff.
There are a number of investigations going on, both criminal and civil, regarding the Madoff Nightmare. Mr. Jaffe is currently being sought for his turn in the limelight. Unfortunately, he does not seem to want to go.
Jaffe, a Massachusetts native,, had been subpoenaed by William Galvin, the Massachusetts Secretary of State, to appear on January 21st at a hearing with securities regulators. The previous week, he was supposed to attend a meeting at Mr. Galvin’s office.
He did not make it to either event.
Jaffe’s lawyer said that the socialite did not attend that hearing because he was challenging the validity of Mr. Galvin’s subpoena.
Jaffe has said previously that he received a commission of 1 per cent to 2 per cent from an investor’s first profit after he guided their money to Madoff. But he insisted that he knew nothing of the fund manager’s “dark side”. Jaffe’s spokesman said: “Bob Jaffe and his family are victims of one of the most willful and despicable frauds ever seen.”
But Galvin said: “I don’t know if he’s a victim or not … The only way we can find out is if he talks to us.”
Yesterday, the news came down that a Suffolk Superior Court judge has Ordered that Jaffe comply with the subpoena no later than February 6th.
“We are going to evaluate today’s ruling and are considering an appeal in this very important issue of fundamental law, that is, extraterritorial jurisdiction,” Jaffe’s attorney said in an interview. Extraterritorial jurisdiction is the legal ability of a government to exercise authority beyond its normal boundaries.
A Florida resident, Jaffe has also told Massachusetts officials he is being treated for a medical problem and can’t travel.
Jaffe is considered a witness and isn’t under criminal investigation, a state attorney said the last time he missed an interview.
At least, not yet.
Many of you reading this are probably thinking, “Well, if he is a victim, and has nothing to hide, why doesn’t he cooperate?”
I would imagine you buy neither the medical problem angle nor legal argument about Massachusetts’s right to force someone from another state to be come up and visit the Commonwealth.
There is another potential reason you may not have thought of.
You know how I am often warning you to get experienced counsel if you feel there in an ongoing investigation which could end up including you in the list of suspects? For Mr. Jaffe, this is one of those times.
The losses suffered at the hands of the Madoff Ponzi scheme are huge and widespread. Whether or not he was the only one who knew what he was doing, the web of suspicion, to say nothing of extent of loss, is only just beginning to play out. To put it simply, anyone who can be tied into the scheme will be tied into the scheme.
I wish I could tell you that all these investigators only wish to find the truth. That they will simply listen, with an open mind, and act accordingly. I would also like to tell you that I have the ability to fly.
They don’t and I haven’t.
The first thing Jaffe did right is to get what I expect is an experienced attorney. Protecting himself, though, from an ever-ready finger of blame that is trained to manipulate people and twist words, is something that he would be insane not to guard against.
On the other hand, there is the public interest in getting to the truth of the matter and punishing the guilty. It is a competing interest. In a perfect world, where these investigations only seek the truth, there is no question but that Jaffe should cooperate in any way possible.
But it is not a perfect world.
And so my advice remains the same. If you find yourself in a similar circumstance as Mr. Jaffe, and are being sought for questioning…get an experienced lawyer. Know your rights. Then decide what to do given the entire situation.
Do it before you act without care and subsequently can only meet with your attorney in court or in a small room in the local jail.
The full articles of this story can be found at http://www.bloomberg.com/apps/news?pid=20601087&sid=aYRfIKtG_5wQ&refer=home# and http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5562935.ece